Credit card interest is something so many of us forget about. We pay our bill each month, lumping interest in with our total owed. But this passive approach could leave you paying more when surprise rate increases happen.
A rate increase could happen this year – and, as The New York Times reports, that rate increase will force cardholders to pay as much as $900 more in interest annually.
You need to know if your credit card interest will be impacted. You need to be prepared to pay more in 2018.
The Danger of Interest Rate Increases
The interest rate you’ve been paying on your credit cards is about to change. Do you know how it could affect you?
A credit card rate increase raises the amount of interest you must pay on every dollar spent. If you aren’t paying attention when the rate increase happens, you could find yourself in dire financial standing.
Rate increases have been happening more frequently. TheStreet reports that interest rates have gone up 5 times in the past 2 years, a rate faster than inflation. Today, Bankrate states the average credit card rate is 16.75%. And experts believe that you might soon be paying nearly 20% interest as the new standard.
Your Monthly Expenses Will Rise
Could a rate increase affect your credit card? Could it have a direct impact on your money?
Your wallet will feel the effects. A credit card rate increase could raise your monthly bill by anywhere from $5 to $50 in interest alone. And, as financial experts from TheStreet warn, a rate hike can add 3 years to your repayment timeline.
A credit card interest rate increase could leave you saddled with debt. When rates increase, thousands of people are left unable to make their monthly minimum payments. Your debt could pile up quickly.
Are You in Danger of a Credit Card Rate Hike?
All credit card holders are at risk. Multiple rate increases could occur in the coming months, compounding your interest and raising your credit card bill.
But some people will be in more danger than others. And your credit score will determine just how much you must pay.
Those with lower credit scores will pay the biggest price and see the biggest interest rate increase. Anyone below a “good” rating will see their interest climb and their debt balloon. The government will set a standard interest rate, but your credit card company gets to determine just how much you’ll have to pay – and they base your rate on your creditworthiness. You could pay thousands of dollars more simply because you’re already carrying a credit card balance.
How to Avoid a Rate Increase
Is it possible to prevent a rate increase from happening? As a credit card user, there’s no way to avoid the new higher interest rate from affecting your current card. However, there is a way to keep your rate low: switch to a low-interest credit card.
Changing your credit card and shopping around for the best possible interest rate is the only way to fight the coming increase. As NBC News financial experts point out, those who do their research and search for new, low interest credit card options will reap the biggest financial benefit.
Search for credit cards with lower rates, and you’ll avoid financial disaster before it strikes. An online search gives you the latest options and the best available interest rates on a variety of popular credit cards.
You can pay less in the months ahead by searching online today.
Like anything, it’s always a good idea to be aware of the latest research. We recommend comparing at least 3 or 4 options before making a final decision. Doing a search online is typically the quickest, most thorough way to discover all the pros and cons you need to keep in mind.
